Juice-Poisoning Case Brings Guilty Plea and a Huge Fine

By PAM BELLUCK

Published: July 24, 1998

CHICAGO, July 23—
In what Federal officials say is the first criminal conviction in a large-scale food-poisoning outbreak, Odwalla Inc. pleaded guilty today to violating Federal food safety laws and agreed to pay a $1.5 million fine for selling tainted apple juice that killed a 16-month-old girl and sickened 70 other people in several states in 1996.

It is rare for Federal officials to bring criminal charges in cases like this, but officials said today that as new kinds of dangerous bacteria spread through the nation's food supply, they were trying to expand the kinds of penalties and levers they could use to force companies to be more rigorous with safety practices.

''The settlement of this case today highlights the attention that we pay to these very important issues,'' said Dr. Michael A. Friedman, the Acting Commissioner of the Food and Drug Administration, which helped prosecute the case. ''It highlights the very substantial responsibilities that industries have for products that are safe to the consumer.''

Caroline Smith DeWaal, director of food safety for the Center for Science in the Public Interest, an advocacy group, said the settlement would be ''a good deterrent for other companies.''

''It certainly ups the ante in terms of companies that would have food safety problems,'' she added.

Odwalla, based in Half Moon Bay, Calif., pleaded guilty to 16 counts of unknowingly delivering ''adulterated food products for introduction into interstate commerce'' in the October 1996 outbreak, in which a batch of its juice infected with the toxic bacteria E. coli O157:H7 sickened people in Colorado, California, Washington and Canada. Fourteen children developed a life-threatening disease that ravages kidneys.

The $1.5 million penalty is the largest criminal penalty in a food poisoning case, Federal officials said. Of that amount, $250,000 will go to a nonprofit food safety organization, Safe Tables Our Priority, and to food safety research centers at Pennsylvania State University and the University of Maryland.

Odwalla will also be on court-supervised probation for five years, meaning that it will have to submit a detailed plan to the food and drug agency demonstrating its food safety precautions and that any subsequent violations could result in more serious charges, Federal officials said.

''No sentence or fine will ever mitigate the terrible tragedy which lies at the heart of this case,'' said Joseph O. Johns, the assistant United States attorney for the Eastern District of California, who led the lengthy investigation.

Chris Gallagher, a spokesman for Odwalla, said the fine ''finalizes and puts a dollar figure to an incident that we took responsibility for two years ago.'' Mr. Gallagher pointed out that ''Odwalla is not being charged with any laws relating to the conditions or cleanliness of our processing facility.''

He added: ''With respect to the size of our fine, we hope that the visibility of that will raise awareness and send a message to consumers about food safety.''

Odwalla, which sells juices and nutritional shakes in the West, Southwest and Midwest, became a success by capitalizing on the growing American taste for the fresh-from-the-farm products. But it began pasteurizing its apple juice after the outbreak, and hired experts to overhaul its safety systems. Odwalla, which suffered substantial losses after the outbreak, reported its first post-outbreak profits last month. In June, the company reported net income of $140,000 for the third quarter, on sales of $15.4 million.

Criminal charges in food safety cases are uncommon. It is often difficult to determine the source of a food poisoning outbreak and, once found, to assess how much responsibility suppliers, manufacturers or distributors have for the contamination.

In addition, the authorities say, there are few criminal laws that apply specifically to food safety.

The New York Times reported in January that in the weeks before the outbreak, Odwalla began relaxing its standards on accepting blemished fruit and began to rein in the authority of its own safety officials, according to company documents and interviews with former Odwalla managers. By these accounts, on the day the contaminated juice was pressed, production managers brushed aside warnings from a company inspector that a batch of apples was too rotten to use without taking special precautions against contaminants.

Odwalla officials have acknowledged that their safety systems failed to keep out the E. coli, but they deny that the company took any undue risks and say that, like many others in their industry, they simply did not realize that E. coli O157:H7 could live in apple juice.

Odwalla has settled more than a dozen civil suits, including payments of more than $12 million to the families of the five most-injured of the surviving children.

Terry Beverly, a Seattle father whose son Michael, then 2, was hospitalized for weeks, said he hoped that the Odwalla criminal penalty would be seen as ''kind of a fine for the industry as a whole, letting the industry know, 'You guys, you got to be a little more careful.' ''